What are ERC20 tokens
ERC20 tokens are tokens that utilize the Ethereum blockchain smart contract functionality. The standard was created because initially, tokens that were issued by the projects based on the Ethereum blockchain were utilizing different smart contract protocols which led to incompatibility between various projects. All ERC20 tokens use the Ethereum blockchain address space, which, for instance, makes them compatible with the same wallets that can hold Ethereum.
What does ERC stand for
ERC (Ethereum Request for Comments) is an official commenting protocol for making suggestions related to the improvement of the Ethereum network; 20 is a unique identification number of the proposal. Tokens meeting specifications are known as ERC20 tokens and in fact are smart contracts for the Ethereum blockchain. Even though the ERC-20 tokens function within the framework installed by the Ethereum command, this framework is quite broad, providing developers with greater flexibility when creating decentralized applications
What are the use cases for ERC-20 standard
ERC20 tokens are most commonly issued as utility tokens issued during an ICO and sold to the investors in exchange for the cryptocurrency. The fact that all ERC20 tokens share the same standard dramatically simplifies development and extends connectivity of the project by allowing to utilize the same development space and giving access to a wide range of products, such as ERC20 compatible cryptocurrency wallets.